* APG to buy 20 pct of e-Shang, set up joint venture
* JV to build, run modern logistics properties in China
* e-Shang has raised over $1 bln in equity, plans IPO
(Adds detail on China logistics industry, e-Shang expansion
By Stephen Aldred and Clare Jim
HONG KONG, May 29 Dutch pension fund APG Asset
Management will spend up to $650 million to buy 20 percent of
Chinese warehouse firm e-Shang and establish a joint venture,
aiming to capitalise on strong demand for storage amid an online
shopping boom in China.
APG and e-Shang, backed by private equity firm Warburg
Pincus LLC, will use the joint venture to develop and
run modern logistics real estate assets across China, the
companies said in a joint statement on Thursday.
China's ageing warehouses could require investment of $2.5
trillion over the next 15 years to cope with a surge in
e-commerce, Reuters recently reported. By 2020, China's
e-commerce sector will be larger than those of the United
States, Britain, Japan, German and France combined, consultants
KPMG said in a recent report.
The demand for warehouses has drawn the attention of pension
funds such as the Canadian Pension Plan Investment Board and
private equity firms such as Blackstone Group LP and
Carlyle Group LP.
"With the continued growth of third-party logistics,
e-commerce and the evolution of domestic consumption patterns
combined with a severe shortage in the supply of modern
logistics facilities, we strongly believe that the logistics
real estate sector in China will be a long-term beneficiary of
these trends," Sachin Doshi, APG's head of non-listed real
estate for Asia-Pacific, said in the statement.
APG, which managed assets of more than 359 billion euros
($488.15 billion) as at the end of April, will consider further
real estate investment of this kind in Asia, Doshi said in an
email response to questions from Reuters.
Shanghai-based e-Shang, co-founded by Warburg and two local
partners in 2011, owns over 1.5 million square metres of
completed and ongoing warehouse projects in China.
APG's investment will take the amount of equity capital
e-Shang has raised to over $1 billion. That includes a $120
million loan from Goldman Sachs Group Inc extended in
anticipation of e-Shang conducting an initial public offering.
e-Shang is positioned to more than triple the size of its
warehouse portfolio over the next few years, said Jeffrey
Perlman, an executive director at Warburg.
Less than 20 percent of China's warehouses are categorised
as modern, with fully computerised tracking systems and the
latest in retail technology, according to Global Logistic
Properties Ltd (GLP) and other warehouse builders.
The lack of technology can cut into profits for e-commerce
firms. Though wages in China are much lower than in the United
States, it can cost over twice as much to transport goods,
according to GLP, the biggest foreign builder of logistics
facilities in China.
($1 = 0.7354 Euros)
(Additional reporting by Thomas Escritt in AMSTERDAM; Editing
by Edwina Gibbs, Miral Fahmy and Christopher Cushing)